How Much Is Job Market Really Improving?

It’s getting easier for unemployed workers to find jobs. Whether they’re good jobs is another question.

There were 2.99 job seekers for every open job in June, the Labor Department said Tuesday, the first time the ratio has dropped below three since October 2008. Unemployed workers still have it a lot harder than in the mid-2000s, when there were consistently fewer than two workers per opening, but their prospects are far better than in the depths of the recession, when there were more than six job seekers for every job.

July data won’t be available for another month, but it likely showed further improvement: 19.8% of unemployed workers found jobs in July, according to Friday’s jobs report, the best mark of the recovery.

But job seekers aren’t seeing their odds improve because employers are stepping up their hiring. Companies are posting somewhat more job openings — 3.9 million in June, up 144,000 from a year earlier — but they remain slow to fill them. Hiring actually fell to its lowest level of the year in June, and has been little better than flat over the past two years.

Rather, unemployed workers are doing better because there are fewer of them competing for jobs. Layoffs have fallen back to pre-recession levels and are well below the number of hires. So as job seekers find work, they aren’t being replaced on the unemployment rolls by new job losers. New claims for unemployment benefits last week fell to a five-and-a-half-year low.

At the same time, millions of job seekers have stopped looking for work and no longer count as unemployed. Add back in workers who want a job but aren’t actively looking and there are five workers for every job opening. (That ratio has declined a bit more slowly than the ratio of workers to opening, reflecting the fact job seekers remain more likely to drop out of the labor force than find a job. But a narrower definition of “discouraged” workers — which includes only those who say they’ve stopped looking because they can’t find jobs — has fallen more or less in parallel with the ranks of the officially unemployed.)

Even those lucky enough to find jobs, however, aren’t necessarily finding good ones. Nearly a third of all private-sector hiring in June was in the low-paying retail and restaurant sectors. Another fifth was in professional and business services, a broad category that includes some high-paying jobs but also includes temporary workers. Separate evidence from Friday’s jobs report shows that the share of jobs that are part time has been trending up this year, though it is below its mid-recession high. That’s leading to fears that the recovery is creating mainly low-end jobs.

“We’re seeing a bifurcation that seems to be expanding not decreasing,” said Jeff Joerres, chairman and chief executive of the staffing firm Manpower Group.

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Mr. Joerres said the weak overall economy gives companies an incentive to fill jobs with flexible temporary workers where possible. When they need a permanent, full-time employee, they’ll wait for the perfect person to walk in the door.

“They have no incentive to make a fast decision,” Mr. Joerres said. “The demand is not cattle-prodding them.”

The longer-term question is whether good jobs will return when the economy improves. Marisa Di Natale, an economist at Moody’s Analytics, recently looked at hiring after past recessions and found a consistent pattern: Hiring in low-level jobs picked up first, followed by better-paying jobs once the recovery took hold.

“You see almost the same pattern in every recession since the 1980s, which is that the low end of the spectrum grown much faster initially in the recovery,” Ms. Di Natale said, “and then you see this convergence.”

One possible explanation for the pattern: productivity. When the economy first emerges from a recession, manufacturers and other high-tech firms can put off hiring, at least for a while, meeting rising demand by asking more from existing workers. That’s harder for restaurants — if traffic picks up, they need more servers. As the recovery gains strength and employers become more confident, however, manufacturers and others will eventually step up their hiring as well.

“There is some optimism there,” said Heidi Shierholz, an economist with the left-leaning Economic Policy Institute. “We are not becoming an economy of only retail and restaurant jobs. It’s just that the labor market is so weak.”

That’s good news for economists worried about the long-run future of American jobs. But it doesn’t do much good for those still waiting for the recovery — now officially in its fifth year — to feel like one.

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